Proceeds Policy

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Review History

Version: Date of Review: History:
1 08/10/2015 Document Elaboration.
2 12/01/2017 Change of title from “Dividends” to “Proceeds”; Inclusion of items I. Purpose, II. Scope, VI. Additional Documentation, VII. Concepts and Acronyms, V. Responsibilities, subitems 2.4 and 3.2 to 3.2.2 of III. Guidelines, IV. Outcome Management. Update of the following subitems of III. Guidelines: 2.2.1 and 3.1.
3 07/26/2018 Amendment to subitem 3.1 of III. Guidelines.
4 08/26/2020 Semi-annual review and inclusion of a note in item 3.1 on the change in payment frequency from quarterly to annual, applicable only to 2020.

 

I. Purpose

To set out the rules for distribution of Dividends and Interest on Equity to the company’s shareholders.

II. Scope

Shareholders who own CIEL3 shares held in custody at B3 S.A.- Brasil, Bolsa, Balcão and/or who own American Depositary Receipts (“ADRs”) of Cielo S.A. (“Company”).

All management members (executive officers, members of the Board of Directors and member of the Advisory Committees), Fiscal Council members and employees of Cielo S.A., Servinet Serviços Ltda., Aliança Pagamentos e Participações Ltda. and Stelo S.A., hereinafter referred to as “Cielo” or “Company”.

All Company subsidiaries must define their guidelines based on the guidance provided for in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.

Regarding its Affiliates, the Company’s representatives acting as management members of the Affiliates must spare no effort for said companies to define their guidance based on the guidelines provided for in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.

III. Guidelines1. Rules for Profit Retention

1. Rules for Profit Retention

1.1. In addition to the applicable rules in the Brazilian Corporation Law and pursuant to its Bylaws, the Company may keep a statutory profit reserve called “Expansion Reserve”, whose purpose will be to finance the expansion of its activities and/or the activities of its subsidiaries and affiliates, including through capital increase subscription.

1.2 Such reserve will be composed of up to fifty percent (50%) of annual net income, adjusted as set forth in Article 202 of the Brazilian Corporation Law, and its balance, added to the balances of other reserves, except for the unrealized profit reserve and the reserve for contingencies, cannot exceed one hundred percent (100%) of the Company’s subscribed capital stock.

2. Rules for distribution of Dividends and Interest on Equity

2.1. The annual declaration of Dividends exceeding the minimum mandatory dividends is subject to approval by the Annual Shareholders’ Meeting by a majority vote, and it will depend on several factors including, but no limited to, the Company’s operating results, financial position, cash needs and future prospects, as well as other factors that the Board of Directors and the shareholders may deem relevant.

2.2. The Bylaws establish the payment of minimum mandatory dividends of, at least, thirty percent (30.0%) of net income reported in the financial statements, adjusted according to the Brazilian Corporation Law.

2.2.1. The dividends mentioned above shall not be mandatory for the fiscal year in which the Company’s Management informs the Annual Shareholders’ Meeting that they are not compatible with its financial position.

2.3. The Board of Directors may, pursuant to the Brazilian Corporation Law and according to the Company’s operating results, financial position, cash needs, future prospects and other factors, resolve on the payment of interim dividends and interest on equity.

2.4. As proposed by Management, subject to the approval of the Annual Shareholders’ Meeting, the Company may pay or credit interest on equity, pursuant to applicable laws. Any amounts so disbursed may be considered as part of the mandatory dividends provided for in the Bylaws.

3. Payment Schedule:

3.1.  Payment of dividends and interest on equity shall take place on a quarterly basis, considering the results obtained each quarter. Said payment shall be made in the quarter following the one when the results were obtained. 1

3.2. Pursuant to article 204 of the Brazilian Corporation Law:

3.2.1. The Company may prepare semi-annual balance sheets or balance sheets for shorter periods and, upon approval by the Board of Directors and pursuant to the limits set forth by law, declare dividends to the profit account presented in these balance sheets, which may be offset with minimum mandatory dividends; and

3.2.2. The Board of Directors may declare interim dividends to the retained earnings account or profit reserves, based on the last balance sheet approved by the shareholders.

IV. Outcome Management

Employees, suppliers, and other stakeholders who notice any deviation to this Policy’s guidelines may report the fact to the Ethics Channel (www.canaldeetica.com.br/cielo or 0800 775 0808), anonymously or not.

Internally, the failure to comply with this Policy’s guidelines implies the application of measures for agents’ liability who fail to comply therewith, according to the respective seriousness of such non-compliance.

V. Responsibilities

  • Management (Board of Directors and Statutory Executive Board): To comply with legal provisions, Bylaws provision, the guidelines set forth in this Policy, as well as to keep it updated so as to ensure that any changes in the Company’s direction be incorporated into it and to clarify doubts related to its content and application.

VI. Additional Documentation

VII. Concepts and Acronyms

For the purposes of this Policy, it is hereby set out that:

  • Shareholders: Shareholders: holders of Company shares and ADRs (American Depositary Receipts) on the base date for payment of Dividends and Interest on Equity until the cut-off date informed to the market (ex-dividends date).
  • Dividends: share of profits distributed to the Company’s shareholders, proportionately to the number of shares held by them, ascertained at the end of each fiscal year.
  • Interest on Equity (IoE): share of profits distributed to the Company’s shareholders, proportionately to the number of shares held by them, ascertained at the end of each fiscal year, deductible for income tax base purposes.

VIII. Miscellaneous

The Company’s Board of Directors is responsible for amending this Policy whenever necessary.

This Policy will become effective as of its date of approval by the Board of Directors and revokes any opposing rules and procedures.

 

Barueri, October 22, 2020.

Cielo S.A.